in the united states district court for the southern ... · rutherford, edward miechle, rachel...

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IN THE UNITED STATES DISTRICT COURTFOR THE SOUTHERN DISTRICT OF ILLINOIS

BARBARA RUTHERFORD, EDWARDMIECHLE, RACHEL GARZA, BETHRENEE BRODHACKER, SANDRA ZOLA,THOMAS VOGEL, TOM BENHOFF,EMIL SMITH, CONNIE TESTA, andDARRELL LANE,

Plaintiffs,

vs.

MERCK & CO., INC., WALGREEN CO.,d/b/a WALGREENS, and AMERICANDRUG STORES, INC., d/b/a OSCO DRUGS,

Defendants.

))))))))))))))))

CIVIL NO. 06-159-GPM

MEMORANDUM AND ORDER

MURPHY, Chief District Judge:

This action is before the Court on the Motion to Remand brought by Plaintiffs Barbara

Rutherford, Edward Miechle, Rachel Garza, Beth Renee Brodhacker, Sandra Zola, Thomas Vogel,

Tom Benhoff, Emil Smith, Connie Testa, and Darrell Lane (Doc. 18). For the following reasons,

the motion is GRANTED.

INTRODUCTION

Plaintiffs originally filed this action in the Circuit Court for the Third Judicial Circuit,

Madison County, Illinois, asserting claims based upon strict products liability, negligence, consumer

fraud, common-law fraud, and breach of warranty arising from personal injuries allegedly caused

by Vioxx, a prescription pain medication manufactured by Defendant Merck & Co. (“Merck”).

Merck subsequently removed the action to this Court, asserting that Defendants Walgreen Co.

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(“Walgreens”) and American Drug Stores, Inc. (“Osco Drugs”), who are, like Plaintiffs, citizens of

Illinois, have been fraudulently joined to defeat federal diversity jurisdiction. Plaintiffs have

requested remand of the action to Illinois state court for lack of subject matter jurisdiction.

At issue here are Count III, Count VI, and Count XI of Plaintiffs’ complaint, which assert,

respectively, claims for sale of a defective product sounding in strict products liability, negligent

failure to warn, and breach of warranty against Walgreens and Osco Drugs. More specifically,

Plaintiffs’ complaint alleges that Walgreens and Osco Drugs filled prescriptions for Vioxx for

Plaintiff Barbara Rutherford and that Osco Drugs filled prescriptions for Vioxx for Plaintiff

Edward Miechle. Merck contends that Plaintiffs have fraudulently joined Walgreens and

Osco Drugs because Plaintiffs’ claims against those parties are barred by the “learned intermediary”

doctrine under Illinois law. Also, Merck contends that under Illinois law a sale of prescription

medication does not constitute a sale of “goods” for purposes of Article 2 of the Illinois Uniform

Commercial Code (“Illinois UCC”). Finally, Merck contends that the claims in this case are

procedurally misjoined so as to amount to fraudulent joinder. The Court will address each of these

contentions in turn.

DISCUSSION

A. Merck’s Request for a Stay

In opposing Plaintiffs’ request for remand, Merck urges the Court to stay proceedings in this

action pending transfer of the action by the Judicial Panel on Multidistrict Litigation (“JPML”) for

coordinated or consolidated pretrial proceedings. See 28 U.S.C. § 1407. As Merck acknowledges,

the Court retains full jurisdiction over this action until such time as a transfer order by the JPML is

filed in the office of the clerk of the district court of the transferee district, in this instance the United

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States District Court for the Eastern District of Louisiana. See Illinois Mun. Retirement Fund v.

Citigroup, Inc., 391 F.3d 844, 850 (7th Cir. 2004); Wisconsin v. Abbott Labs., 390 F. Supp. 2d 815,

819 (W.D. Wis. 2005). The decision to grant a stay rests within the Court’s discretion. See Walker

v. Merck & Co., No. 05-CV-360-DRH, 2005 WL 1565839, at *2 (S.D. Ill. June 22, 2005).

In Meyers v. Bayer AG, 143 F. Supp. 2d 1044 (E.D. Wis. 2001), the court noted that, while

it is within the power of a district court to grant a stay of proceedings although subject matter

jurisdiction is in question, a court should be “reluctant” to grant such a stay “without making any

effort to verify jurisdiction” for a number of reasons. Id. at 1048. First, the Meyers court stated,

“Steel Co. [v. Citizens for a Better Environment, 523 U.S. 83 (1998),] emphasized the constitutional

importance of the ‘jurisdiction first’ principle.” 143 F. Supp. 2d at 1048. See also Leroy v. Great W.

United Corp., 443 U.S. 173, 180 (1979) (issues affecting a court’s subject matter jurisdiction are

“fundamentally preliminary”). Second, the court said, “28 U.S.C. § 1447(c) directs that ‘[i]f at any

time before judgment it appears that the district court lacks subject matter jurisdiction, the case shall

be remanded.’” 143 F. Supp. 2d at 1048 (emphasis in original). “This section dictates that a judge

should give at least some consideration to a remand motion.” Id.

Third, the Meyers court concluded, considerations of judicial economy dictate that a court

conduct at least limited review of a remand motion before granting a stay: “If the limited review

reveals that the case is a sure loser in the court that has jurisdiction (in the conventional sense) over

it, then the [transferor] court . . . should dismiss the case rather than waste the time of another court.”

143 F. Supp. 2d at 1048 (quoting Phillips v. Seiter, 173 F.3d 609, 611 (7th Cir. 1999)). Fourth,

“even though a stay does not directly implicate the merits of a case, it undeniably has important

effects on the litigation. A plaintiff may carefully craft a state court complaint in order to avoid

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litigating the matter in federal court.” Id. “Justice Holmes observed that ‘the party who brings a suit

is master to decide what law he will rely upon, and therefore does determine whether he will bring

a . . . suit arising under . . . the patent or other law of the United States by his declaration or bill.’”

Id. (quoting The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25 (1913)).

The Meyers court concluded that, when faced by a request for a stay while a challenge to

jurisdiction is pending, “a court’s first step should be to make a preliminary assessment of the

jurisdictional issue.” 143 F. Supp. 2d at 1048. If this “first step” suggests that removal was

improper, then the court “should promptly complete its consideration and remand the case to state

court.” Id. at 1049. See also Chinn v. Belfer, No. Civ.02-00131-ST, 2002 WL 31474189, at *3

(D. Or. June 19, 2002) (in denying a request for a stay of a case pending transfer of the case by the

JPML, conducting a preliminary assessment of the merits of the plaintiffs’ request for remand of the

case to state court and concluding that, where “the jurisdictional issue is not factually or legally

difficult,” a stay would be denied and the case would be remanded to state court). In this instance

the Court’s preliminary assessment of Plaintiffs’ motion to remand indicates that the Court should

proceed to resolve the motion.

B. Plaintiffs’ Motion to Remand

1. Legal Standard

Removal based on diversity requires that the parties be of diverse state citizenship and that

the amount in controversy exceed $75,000. See 28 U.S.C. § 1332; Id. § 1441. The party seeking

removal has the burden of establishing federal jurisdiction. See Doe v. Allied-Signal, Inc., 985 F.2d

908, 911 (7th Cir. 1993). “Courts should interpret the removal statute narrowly and presume that

the plaintiff may choose his or her forum.” Id. Put another way, there is a strong presumption in

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favor of remand. See Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir. 1976).

In evaluating diversity of citizenship, a court must disregard a defendant that has been

fraudulently joined. See Schwartz v. State Farm Mut. Auto. Ins. Co., 174 F.3d 875, 878 (7th Cir.

1999). A defendant is fraudulently joined when “there is no possibility that a plaintiff can state a

cause of action against [the] nondiverse defendant[ ] in state court, or where there has been outright

fraud in plaintiff’s pleading of jurisdictional facts.” Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327

(7th Cir. 1993). A defendant seeking removal based on alleged fraudulent joinder has the “heavy”

burden of proving that, after the court resolves all issues of law and fact in the plaintiff’s favor, there

is no possibility the plaintiff can establish a cause of action against the diversity-defeating defendant

in a state court. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992).

2. Plaintiffs’ Claims for Strict Products Liability and NegligenceAgainst Walgreens and Osco Drugs

As discussed, Merck argues that Count III and Count VI of Plaintiffs’ complaint, which

assert claims for strict products liability and negligence against Walgreens and Osco Drugs, are

barred by the “learned intermediary” doctrine under Illinois law. The learned intermediary doctrine,

which applies to both negligence and strict liability claims, provides that, where a manufacturer of

a prescription drug provides adequate warning to physicians of the drug’s known dangerous

propensities, the manufacturer and pharmacists dispensing the drug are relieved of a duty to warn

the drug’s potential users; instead, the physicians, using their medical judgment, have a duty to

convey the warnings to their patients. See Kirk v. Michael Reese Hosp. & Med. Ctr., 513 N.E.2d

387, 392 (Ill. 1987); Fakhouri v. Taylor, 618 N.E.2d 518, 519-20 (Ill. App. Ct. 1993);

Leesley v. West, 518 N.E.2d 758, 761-62 (Ill. App. Ct. 1988); Eldridge v. Eli Lilly & Co., 485

N.E.2d 551, 552-53 (Ill. App. Ct. 1985). See also Ashman v. SK & F Lab Co., 702 F. Supp. 1401,

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1404-05 (N.D. Ill. 1988) (applying Illinois law).

In this instance Plaintiffs specifically have pleaded a well established exception to the

learned intermediary doctrine for cases in which a pharmacy is aware of a patient’s health history,

yet dispenses to the patient a contraindicated drug. In Happel v. Wal-Mart Stores, Inc., 766

N.E.2d 1118 (Ill. 2002), the court held that a pharmacy owes a duty to warn either a customer or the

customer’s physician that a drug is contraindicated where the pharmacy knows of the customer’s

drug allergies and knows that a prescribed drug is contraindicated for a person with those allergies.

See id. at 1124-25. The complaint in this case alleges with respect to Plaintiff Barbara Rutherford

that “[s]he took Vioxx that was sold to her by Walgreens and by Osco Drugs in Illinois.

Walgreens and Osco Drugs, knowing of her health history, sold her Vioxx without warning that

Vioxx was not advisable because of her health history . . . . Because of her use of Vioxx, she

suffered a heart attack.” Compl. ¶ 2. As to Plaintiff Edward Miechle, the complaint alleges that

“Osco Drugs, knowing of his health history, sold him Vioxx without warning that Vioxx was not

advisable because of his health history. Because of his use of Vioxx, he suffered a heart attack.”

Id. ¶ 3. The complaint alleges that Walgreens and Osco Drugs “knew about the health histories of

plaintiffs and knew that Vioxx was contraindicated or not advisable for someone with their

respective health histories, but nevertheless sold Vioxx without warning plaintiffs about this

contraindication.” Id. ¶ 87. Finally, the complaint alleges that “[a]s a direct and proximate result

of defendants’ negligence and breaches of their duty of reasonable care, plaintiffs have been

damaged.” Id. ¶ 89.

The scope of the Court’s inquiry at this juncture is extremely narrow, namely, to determine

whether, after resolving all issues of fact and law in Plaintiffs’ favor, Plaintiffs have stated a claim

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against Walgreens and Osco Drugs upon which relief can be granted in Illinois state court. See

Simmons v. Norfolk S. Ry. Co., 324 F. Supp. 2d 914, 917 (S.D. Ill. 2004) (finding that a diversity-

defeating defendant had not been fraudulently joined where “at a minimum [the plaintiff] has stated

a cause of action under state law” against that defendant); Valentine v. Ford Motor Co., No.

2:03-CV-090-JDT-WGH, 2003 WL 23220758, at *4 (S.D. Ind. Nov. 21, 2003) (explaining that

“[t]he test for fraudulent joinder . . . is a less searching test than the test under Rule 12(b)(6) [of the

Federal Rules of Civil Procedure]. In fact, a federal court may find that a nondiverse defendant is

not fraudulently joined for the purposes of jurisdiction, and later a state court may find that the

plaintiff failed to state a claim against the same nondiverse defendant, who will then be dismissed

from the suit.”) (citations omitted). Accord Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir.

1999) (noting that the fraudulent joinder standard “is even more favorable to the plaintiff than the

standard for ruling on a motion to dismiss under [Rule 12(b)(6) of the Federal Rules of Civil

Procedure].”). Cf. Bane v. Ferguson, 890 F.2d 11, 13 (7th Cir. 1989) (a court need not resolve

unsettled questions of law in favor of a plaintiff in ruling on the propriety of a motion to dismiss for

failure to state a claim upon which relief can be granted).

In evaluating a claim of fraudulent joinder a court may in some circumstances “pierce the

pleadings.” CC Indus., Inc. v. ING/ReliaStar Life Ins. Co., No. 03 C 2075, 2003 WL 21360905,

at *3 (N.D. Ill. June 11, 2003). However, this too is a strictly circumscribed inquiry limited to

uncontroverted summary evidence which establishes unmistakably that a diversity-defeating

defendant cannot possibly be liable to a plaintiff under applicable state law. See Wilson v. Republic

Iron & Steel Co., 257 U.S. 92, 94, 96-98 (1921) (holding that a non-diverse defendant was

fraudulently joined where a verified petition for removal alleged that the defendant was not present

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at all when the plaintiff was injured, and the plaintiff did not controvert those verified allegations);

Wecker v. National Enameling & Stamping Co., 204 U.S. 176, 183-85 (1907) (in a suit for injuries

sustained due to a machine that allegedly was defectively designed, holding that a non-diverse

defendant was fraudulently joined where uncontradicted affidavits showed that the defendant was

merely a draftsman with no responsibility for designing the machine at issue); Faucett v.

Ingersoll-Rand Mining & Mach. Co., 960 F.2d 653, 654-55 (7th Cir. 1992) (in an action for strict

products liability and negligence, finding that the plaintiff had fraudulently joined a co-worker, in

light of the non-diverse defendant’s “uncontradicted affidavit, essentially stating that he has had

absolutely nothing to do with” the machine alleged to have caused the plaintiff’s injury).

In Smallwood v. Illinois Central Railroad Co., 385 F.3d 568 (5th Cir. 2004), the court stated

that fraudulent joinder would be established as to a non-diverse pharmacist if it could be shown that

“the in-state pharmacist defendant did not fill a prescription for the plaintiff patient.” Id. at 574

n.12. See also Veugeler v. General Motors Corp., No. 96 C 7278, 1997 WL 160749, at *3 (N.D.

Ill. Apr. 2, 1997) (in a strict products liability action based on an allegedly defective airbag,

fraudulent joinder was established by an uncontradicted affidavit of a non-diverse defendant alleged

to have designed, manufactured, and supplied the airbag at issue that, although it negotiated for the

contract to install airbags in cars manufactured by its co-defendant, it was not awarded the contract

and “never supplied airbags or any component part thereof for installation in [the manufacturer’s

vehicles], including the vehicle described in plaintiff’s Complaint at Law”); Bodine’s, Inc. v.

Federal Ins. Co., 601 F. Supp. 47, 49-50 (N.D. Ill. 1984) (in an action seeking a declaration that an

insurer owed coverage under an insurance contract, holding that the subject insurance policy along

with uncontradicted affidavits of non-diverse defendants established that the non-diverse defendants

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were not parties to the insurance contract and therefore established that they were fraudulently

joined). Cf. Peters v. AMR Corp., No. 95 C 588, 95 C 922, 95 C 678, 95 C 1417, 95 C 923, 95 C

1418, 1995 WL 358843, at **3-4 (N.D. Ill. June 13, 1995) (in a strict products liability action,

rejecting a claim of fraudulent joinder where the affidavits presented in support of the claim merely

asserted that the product at issue had not been defectively designed). In this case, of course, Merck

has produced no evidence that Walgreens and Osco Drugs never sold Vioxx to any of the Plaintiffs.

Therefore, based on the Court’s review of the pleadings, the Court concludes that Merck has failed

to show fraudulent joinder as to Plaintiffs’ claims for strict products liability and negligence against

Walgreens and Osco Drugs.

The Court finds that Merck’s allegations of fraudulent joinder based on the learned

intermediary doctrine fail for an additional reason. Under Illinois law, to claim the protection of the

learned intermediary doctrine, a defendant must be able to show that physicians received adequate

warning of the known dangerous propensities of a prescription drug. In Proctor v. Davis, 682

N.E.2d 1203 (Ill. App. Ct. 1997), the court held that a drug manufacturer that shared information

about its product’s toxicity only with its own employees breached its duty to warn the medical

community because, without such information, doctors could not provide appropriate and

comprehensive medical advice for their patients. The court said, “Doctors who have not been

sufficiently warned of the harmful effects of a drug cannot be considered ‘learned intermediaries,’”

capable of protecting their patients’ best medical interests. Id. at 1215. Furthermore, the court said,

“the adequacy of warnings is a question of fact, not law, for the jury to determine.” Id.

Plaintiffs’ complaint in this case alleges that Merck failed to warn physicians of the adverse

effects of Vioxx. To cite a few examples:

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The Vioxx manufactured and supplied by Merck was unaccompanied by proper andadequate warnings regarding all adverse side effects associated with the use ofVioxx, and the comparative severity and duration of the adverse effects. Thewarnings given by Merck did not accurately reflect the symptoms, type, scope orseverity of the side effects.

* * * *

Merck also failed to effectively warn users and physicians that numerous othermethods of pain relie[f], including Ibuprofen, Naproxen, and/or aspirin were safer.

* * * *

Merck failed to give adequate post-marketing warnings or instructions for the use ofVioxx because after Merck knew or should have known of the risk of injury fromVioxx use, Merck failed to provide adequate warnings to users or consumers andcontinued to aggressively promote the product to doctors, hospitals, and directly toconsumers.

Compl. ¶ 58, ¶¶ 61-62. In fact, the complaint alleges active fraud by Merck in concealing adverse

health effects of Vioxx from physicians: “Merck communicated the purported benefits of Vioxx,

while failing to disclose the serious and dangerous side effects related to the use of its product, and

in fact actually concealing from health care providers the adverse cardiovascular effects of Vioxx.”

Id. ¶ 93. In light of these allegations, the applicability of the learned intermediary doctrine in this

case clearly presents issues of fact that the Court must resolve in favor of Plaintiffs and in favor of

remand to state court. See Poulos, 959 F.2d at 73.

As a final matter, the Court expresses considerable skepticism about whether the learned

intermediary doctrine is a proper basis for a claim of fraudulent joinder at all, given that the defense

implicates issues about foreseeability and causation germane to the liability of both Merck and the

diversity-defeating defendants. The Court has explained previously that a claim of fraudulent

joinder that “indicate[s] that the plaintiff’s case [is] ill-founded as to all the defendants” is one which

“manifestly [goes] to the merits of the action as an entirety, and not to the joinder” and is “not such

1. Having determined that Plaintiffs have asserted viable claims against the non-diversedefendants for strict products liability and negligence, the Court need not determine whether theyhave viable claims for breach of warranty also. Were the Court to reach the issue, however, theCourt likely would decide that the issue presents an ambiguous question of state law that must beresolved in favor of remand. Merck’s contention that the transactions at issue in this case do notinvolve “goods” within the meaning of Article 2 of the Illinois UCC is based upon Brandt v. BostonScientific Corp., 792 N.E.2d 296 (Ill. 2003), in which the court held that a contract involving the saleand surgical implantation of a pubovaginal sling to treat incontinence was a transactionpredominantly for medical services, not goods. See id. at 303-04. The applicability of the holdingin Brandt to facts like those presented by this case is unclear, as the Court has pointed out on a prioroccasion. See Rabe v. Merck & Co., No. Civ. 05-363-GPM, Civ. 05-378-GPM, 2005 WL 2094741,at *2 (S.D. Ill. Aug. 25, 2005). The Court notes that in Berry v. G. D. Searle & Co., 309 N.E.2d 550(Ill. 1974), a case involving a prescription contraceptive, the court stated that the provisions of theIllinois UCC “clearly demonstrate the legislative intent to create a statutory cause of action forbreach of implied warranty to afford consumer protection to those who sustain personal injuriesresulting from product deficiencies.” Id. at 553. See also Woodill v. Parke Davis & Co., 374 N.E.2d683, 688-89 (Ill. App. Ct. 1978) (in a case arising from injuries to a child allegedly caused by the

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as to require the state court to surrender its jurisdiction.” Simmons, 324 F. Supp. 2d at 917 (quoting

Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 153-54 (1914)). The issue of whether Merck

gave adequate warnings to physicians and users of Vioxx is at the heart of this case, and the Court

questions whether a finding that the non-diverse defendants are shielded from liability by the learned

intermediary doctrine might have preclusive effects with respect to Merck as well. Presumably a

determination that Walgreens and Osco Drugs are immune from liability under the learned

intermediary doctrine would be the law of the case as to Merck. See Moore v. Anderson, 222 F.3d

280, 284 (7th Cir. 2000) (“Under the law of the case doctrine, . . . when a court decides upon a rule

of law, that decision should continue to govern the same issues in subsequent stages of the same

case.”). See also Smallwood, 385 F.3d at 574 (explaining that, when a finding of fraudulent joinder

will have law-of-the-case effect as to the liability of diverse defendants, the “jurisdictional” issue

is in fact an attack on the merits of a plaintiff’s claim that must be resolved in state court). The

Court concludes that this action is due to be remanded to Illinois state court.1

administration of a prescription drug to the child’s mother while she was hospitalized as anobstetrical patient, holding that the plaintiffs stated a claim for breach of implied warranties againstthe manufacturer of the drug). “[I]f ‘intricate analysis of state law’ is needed to dismiss [a] claim,the claim may not be disregarded for purposes of diversity jurisdiction.” Polson v. Cottrell, Inc.,No. 04-CV-822-DRH, 2005 WL 1168365, at *1 (S.D. Ill. May 17, 2005) (quoting Batoff v. StateFarm Ins. Co., 977 F.2d 848, 853 (3d Cir. 1992)). See also Dodson v. Spiliada Mar. Corp., 951 F.2d40, 42 (5th Cir. 1992) (“In evaluating fraudulent joinder claims, we must . . . resolve all . . .ambiguities in the controlling state law in favor of the non-removing party.”). Also, the Court notesthat the question of whether a transaction is predominantly for goods or services generally is one offact. See Brandt, 792 N.E.2d at 300-01.

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3. Fraudulent Misjoinder

Finally, Merck argues that the claims in this case are “fraudulently misjoined,” relying upon

Tapscott v. MS Dealer Service Corp., 77 F.3d 1353 (11th Cir. 1996), in which the court discovered

a third form of fraudulent joinder in addition to the two that currently are recognized in this Circuit,

namely, “egregious” misjoinder of claims that is tantamount to fraudulent joinder. In Tapscott, one

group of plaintiffs seeking to represent a class sued a group of defendants for statutory fraud arising

from the sale of automobile service contracts. See id. at 1355. Another group of plaintiffs

representing a separate putative class sued another group of defendants for statutory fraud arising

from the sale of extended service contracts in connection with the sale of retail products. See id.

The court held that the defendants had been misjoined because on the face of the complaint there

was no claim against the two groups of defendants even remotely arising from the same transaction

or occurrence. All that the claims shared was an invocation of the Alabama fraud statute, rendering

joinder “so egregious as to constitute fraudulent joinder.” Id. at 1360. The Tapscott court

emphasized that misjoinder is tantamount to fraudulent joinder not simply when claims are

misjoined but when claims are egregiously misjoined: “We do not hold that mere misjoinder is

fraudulent joinder, but we do agree with the district court that Appellants’ attempt to join these

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parties is so egregious as to constitute fraudulent joinder.” Id.

The United States Court of Appeals for the Seventh Circuit has not had occasion to pass on

the validity of the doctrine of “fraudulent misjoinder” crafted in Tapscott. This Court gives

respectful consideration to decisions of courts of appeals in sister circuits, see Colby v. J.C. Penney

Co., 811 F.2d 1119, 1123 (7th Cir. 1987), but the Court declines to follow Tapscott. In the Court’s

view, whether viable state-law claims have been misjoined – even “egregiously” misjoined – is a

matter to be resolved by a state court. Nothing in the jurisprudence of the Supreme Court of the

United States regarding fraudulent joinder suggests that the joinder of non-fraudulent claims is a

question that implicates the subject matter jurisdiction of a federal court. See Southern Ry. Co. v.

Lloyd, 239 U.S. 496, 500 (1916) (holding that fraudulent joinder is not shown by “undertaking to

try the merits of a cause of action, good upon its face”); Chicago, Rock Island & Pac. Ry. Co. v.

Whiteaker, 239 U.S. 421, 425 (1915) (holding that there is no fraudulent joinder when “the plaintiff

has a right of action under the law of the state and to insist upon [a non-diverse defendant’s]

presence as a real defendant.”).

Furthermore, the federal courts traditionally have held that matters of state civil procedure,

including, presumably, joinder of parties and claims, have no bearing on the existence or non-

existence of federal subject matter jurisdiction in a given case. For example, in Shamrock Oil & Gas

Corp. v. Sheets, 313 U.S. 100 (1941), the Court determined that a plaintiff against whom a

counterclaim had been filed could not remove a case to federal court because the removal statute

granted the privilege of removal to defendants only. The plaintiff argued that it was essentially a

defendant because, under state procedural rules, a judgment could be entered against it. The Court

stated,

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But at the outset it is to be noted that decision turns on the meaning of the removalstatute and not upon the characterization of the suit or the parties to it by statestatutes or decisions. The removal statute which is nationwide in its operation, wasintended to be uniform in its application, unaffected by local law definition orcharacterization of the subject matter to which it is to be applied. Hence the Act ofCongress must be construed as setting up its own criteria, irrespective of local law,for determining in what instances suits are to be removed from the state to the federalcourts.

Id. at 104 (citation omitted). See also Chicago, R.I. & P.R. Co. v. Stude, 346 U.S. 574, 580 (1954)

(state “procedural provisions cannot control the privilege [of] removal granted by the federal

statute.”). The lower federal courts likewise traditionally have recognized that “[t]he question of

jurisdiction cannot be determined by the rules of joinder.” Smith v. Abbate, 201 F. Supp. 105, 113

(S.D.N.Y. 1961). See also Edward J. Moriarty & Co. v. General Tire & Rubber Co., 289 F. Supp.

381, 385 (S.D. Ohio 1967) (joinder under the Federal Rules of Civil Procedure “is limited to the

extent that jurisdictional requirements must be met.”); Fechheimer Bros. Co. v. Barnwasser, 3

F.R.D. 394, 395 (E.D. Ky. 1944) (rules of joinder cannot be construed “to extend or limit the

jurisdiction of the courts of the United States.”).

In the Court’s view, the Tapscott doctrine is an improper expansion of the scope of federal

diversity jurisdiction by the federal courts. See In re Norplant Contraceptive Prods. Liab. Litig.,

976 F. Supp. 559, 561 (E.D. Tex. 1997) (declining to sever claims to permit removal in diversity

jurisdiction, and observing that “two major policies announced in removal jurisprudence [are] that

federal courts must apply the removal statutes in a manner that carries out the intent of Congress to

restrict removal, and that cases should be remanded if jurisdiction is doubtful.”); Moore v. Mobil Oil

Corp., 904 F. Supp. 587, 588 (E.D. Tex. 1995) (rejecting the defendants’ “argument sounding in

equity and public policy” for severance of claims to permit removal in diversity: “This court cannot

rewrite the removal statute to grant itself subject matter jurisdiction over this action . . . . [I]t is

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abundantly clear that Congress has not vested in federal district courts the power to fashion equitable

removal solutions to procedural complexities.”). However, even assuming for the sake of argument

that issues of permissive joinder under state law somehow trench upon federal subject matter

jurisdiction, there are further reasons for declining to adopt the Tapscott doctrine.

As the Seventh Circuit Court of Appeals has observed many times, most recently in

Knudsen v. Liberty Mutual Insurance Co., 411 F.3d 805 (7th Cir. 2005), “the first virtue of any

jurisdictional rule is clarity and ease of implementation.” Id. at 806. “The first characteristic of a

good jurisdictional rule is predictability and uniform application.” Exchange Nat’l Bank of

Chicago v. Daniels, 763 F.2d 286, 292 (7th Cir. 1985). “Jurisdictional rules ought to be simple and

precise so that judges and lawyers are spared having to litigate over not the merits of a legal dispute

but where and when those merits shall be litigated.” In re Lopez, 116 F.3d 1191, 1194 (7th Cir.

1997). “The more mechanical the application of a jurisdictional rule, the better. The chief and often

the only virtue of a jurisdictional rule is clarity.” In re Kilgus, 811 F.2d 1112, 1117 (7th Cir. 1987)

(citations omitted). In short, “jurisdictional rules should be as simple as possible.” Kennedy v.

Wright, 851 F.2d 963, 967 (7th Cir. 1988) (quoting Cote v. Wadel, 796 F.2d 981, 983 (7th Cir.

1986)).

The reasons underlying the policy favoring simple, easy-to-apply jurisdictional rules are

obvious. First, it is, by definition, harmful to federalism and a plaintiff’s presumptive right to

choose his or her forum for federal courts to exercise jurisdiction they do not possess. See Klein v.

Vision Lab Telecomms., Inc., 399 F. Supp. 2d 528, 531 (S.D.N.Y. 2005) (“It is well settled that

removal statutes are to be strictly construed against removal, with all doubts resolved in favor of

remand, as removal jurisdiction undercuts federalism and abridges the deference courts generally

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give to a plaintiff’s choice of forum.”). Second, the consequences of erroneous jurisdictional

decisions can be very serious for both courts and litigants, in terms of wasted time and resources.

See, e.g., Indiana Gas Co. v. Home Ins. Co., 141 F.3d 314, 319-20 (7th Cir. 1998) (after three years

of litigation, dismissing a case on appeal for lack of subject matter jurisdiction based on an issue of

first impression). See also McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 336-37 (5th Cir. 2004)

(after a full trial on the merits and a judgment for the defendant, on appeal ordering a removed case

remanded to state court for lack of subject matter jurisdiction due to the trial court’s erroneous

finding of fraudulent joinder).

The Court’s review of the caselaw regarding the fraudulent misjoinder doctrine that has

emerged in the ten years since Tapscott was decided discloses enormous judicial confusion

engendered by the doctrine. For example, a number of courts, applying Tapscott, have held that

mere misjoinder gives rise to removal jurisdiction. See, e.g., Burns v. Western S. Life Ins. Co., 298

F. Supp. 2d 401, 403 (S.D.W.Va. 2004) (“In this district, the ‘egregious’ nature of the misjoinder

is not relevant to the analysis.”); In re Rezulin Prods. Liab. Litig., 168 F. Supp. 2d 136, 147-48

(S.D.N.Y. 2001) (“While aware that several courts have applied Tapscott’s egregiousness standard

when considering misjoinder of plaintiffs in the context of remand petitions, . . . this Court

respectfully takes another path.”). Other courts adhere, however, to the classical Tapscott doctrine

that only when joinder that otherwise is questionable, or even improper, undergoes a sinister

transformation into something “egregious” does it become an issue that implicates the

subject matter jurisdiction of a federal court. See, e.g., Asher v. Minnesota Mining & Mfg. Co.,

No. Civ.A. 04CV522KKC, 2005 WL 1593941, at *7 (E.D. Ky. June 30, 2005) (“[S]omething more

than ‘mere misjoinder’ is required before this Court may take the extraordinary step of exercising

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jurisdiction over an action where jurisdiction is lacking on the face of the complaint.”); Bright v.

No Cuts, Inc., No. Civ. A. 03-640, 2003 WL 22434232, at *9 (E.D. La. Oct. 27, 2003)

(“[M]ere misjoinder . . . is more properly addressed to the state district court.”); Johnson v. Glaxo

Smith Kline, 214 F.R.D. 416, 421 (S.D. Miss. 2002) (“Since the Court has found that . . . joinder of

the plaintiffs’ claims against the [defendants], even if not proper, does not rise to the level of

fraudulent joinder, the Court shall let the state court decide the issues of improper joinder and

severance.”); Alman v. GlaxoSmithKline Corp., No. Civ. A. 02-006, 2002 WL 465202, at *4

(E.D. La. Mar. 25, 2002) (“Whereas ‘fraudulent joinder’ is properly addressed by the federal District

Court, the issue of ‘misjoinder’ is more properly addressed to the state District Court.”).

Also, even among those courts that accept “egregious” misjoinder as the predicate to

application of the Tapscott doctrine, no clear definition of “egregiousness” has emerged. See, e.g.,

Walton v. Tower Loan of Miss., 338 F. Supp. 2d 691, 695 (N.D. Miss. 2004) (“[T]he governing legal

standards regarding the fraudulent misjoinder doctrine are far from clear.”); Bright, 2003

WL 22434232, at *4 n.21 (“While the Tapscott [c]ourt was clear that ‘mere misjoinder’ is not

equivalent to fraudulent misjoinder, this aspect of the Tapscott holding has engendered confusion

among courts and commentators alike.”); In re Bridgestone/Firestone, Inc., 260 F. Supp. 2d 722,

728 (S.D. Ind. 2003) (“[U]nder Tapscott, something more than ‘mere misjoinder’ of parties may be

required to find fraudulent misjoinder. Precisely what the ‘something more’ is was not clearly

established in Tapscott and has not been established since.”).

Many courts have foundered on shoals of tautology in trying to define fraudulent misjoinder.

See, e.g., Walton, 338 F. Supp. 2d at 695 (defining “egregious misjoinder” as joinder that is “grossly

improper”); Barron v. Miraglia, No. 4:04-CV-376-A, 2004 WL 1933225, at *2 (N.D. Tex. Aug. 30,

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2004) (defining fraudulent misjoinder as joinder that is “totally unsupported”); Rudder v. Kmart

Corp., No. Civ. A. 97-0272-BH-S, 1997 WL 907916, at *6 (S.D. Ala. Oct. 15, 1997) (defining

fraudulent misjoinder as joinder that is “egregious, unreasonable, and patently wanting in any

colorable basis”). In Terrebonne Parish School Board v. Texaco, Inc., No. Civ. A. 98-0115, 1998

WL 160919 (E.D. La. Apr. 3, 1998), the court defined egregious misjoinder as the absence of a

“palpable connection” between claims asserted against diverse and non-diverse defendants. Id.

at *3. Other courts have suggested that joinder is egregious where it is “collusive,” Koch v. PLM

Int’l, Inc., No. Civ.A. 97-0177-BH-C, 1997 WL 907917, at *4 (S.D. Ala. Sept. 24, 1997), or where

joinder of claims is characterized by “bad faith.” In re Rezulin, 168 F. Supp. 2d at 147 (observing

that “courts considering the issue [of egregious misjoinder] generally have looked for the additional

element of a bad faith attempt to defeat diversity.”). Still other courts insist, however, that a

plaintiff’s subjective motive for joining claims is irrelevant in evaluating fraudulent misjoinder. See,

e.g., Asher, 2005 WL 1593941, at *7 n.2 (“As with the fraudulent joinder analysis, the Court does

not believe that the plaintiff’s actual motive is relevant to the analysis of whether the plaintiffs’

claims are misjoined under state or federal rules.”).

A number of courts seem to have adopted the view that egregious misjoinder is tested by

whether there is a reasonable probability that a state court would find proper joinder. See, e.g.,

Moore v. SmithKline Beecham Corp., 219 F. Supp. 2d 742, 746 (N.D. Miss. 2002) (finding that the

joinder of plaintiffs was not egregious because there was “at least a possibility that the state court

would find joinder proper in this case”); Johnson, 214 F.R.D. at 422 (finding that the joinder of

defendants was not fraudulent because there was a possibility that the state court would find joinder

proper); Conk v. Richards & O’Neil, LLP, 77 F. Supp. 2d 956, 971 (S.D. Ind. 1999) (“[T]he court

2. Not the least of the confusion created by Tapscott is an ongoing debate among federalcourts about whether egregious misjoinder is tested using federal or state procedural rules. See, e.g.,In re Silica Prods. Liab. Litig., 398 F. Supp. 2d 563, 651 n.141 (S.D. Tex. 2005) (applying federalrules); Brooks v. Paulk & Cope, Inc., 176 F. Supp. 2d 1270, 1274 (M.D. Ala. 2001) (same); Koch,1997 WL 907917, at **3-4 (same). But cf. Walton, 338 F. Supp. 2d at 695-96 (applying stateprocedural rules); Lyons v. Lutheran Hosp. of Ind., No. 104CV0728DFHVSS, 2004 WL 2272203,at *5 (S.D. Ind. Sept. 15, 2004) (same); In re Diet Drugs (Phentermine, Fenfluramine,Dexfenfluramine) Prods. Liab. Litig., 294 F. Supp. 2d 667, 673-74 (E.D. Pa. 2003) (same).According to one court, state procedural rules are carrying the day. See Asher, 2005 WL 1593941,at *6. The Court notes that the Tapscott decision employed the federal joinder rule. See 77 F.3dat 1359-60.

Page 19 of 21

believes the controlling standard is essentially the same that applies to fraudulent joinder: Is there

a reasonable possibility that a state court would find [proper joinder]?”). However, there are at least

two reasons why the Court cannot adopt this standard.

First, under the law of this Circuit, a case removed from state court to federal court becomes,

“when it arrive[s] there, . . . subject to the same rules of procedure as if it had been originally sued

in [federal] court.” Grivas v. Parmelee Transp. Co., 207 F.2d 334, 337 (7th Cir. 1953). See also

Twin Disc, Inc. v. Lowell, 69 F.R.D. 64, 65 (E.D. Wis. 1975) (despite the fact that a suit was begun

in state court, timely removal of the suit to a federal district court causes the Federal Rules of Civil

Procedure to become controlling as to the suit). Cf. Savarese v. Edrick Transfer & Storage, Inc.,

513 F.2d 140, 144 n.6 (9th Cir. 1975) (state rules of procedure are overridden by federal rules in

removed actions).2 Second, any jurisdictional principle that requires federal courts as a regular

matter to construe state procedural rules and to pronounce on the propriety of joinder thereunder

strikes the Court as an exceptionally weird and pernicious intrusion by federal courts into matters

properly of state concern and a disruption of the orderly development of state law. See Allstate Ins.

Co. v. Menards, Inc., 285 F.3d 630, 638 (7th Cir. 2002) (citing Younger v. Harris, 401 U.S. 37, 44

(1971)) (noting that the Erie doctrine, requiring federal courts to apply and in some instances predict

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the content of state substantive law, has “the potential for significant intrusion” into state law,

“sometimes with disastrous results,” and cautioning that the task of applying and predicting state

law “be undertaken with great care, thoroughness and a full realization of the impact that the

process, even when executed adroitly, has on ‘Our Federalism.’”).

Finally, just as no clear standards for the application of the Tapscott doctrine have emerged,

the Court predicts that no such standards will emerge. The Court is well aware from its experience

that determinations about proper joinder are of necessity highly discretionary, involving intensely

case-specific decisions about the fairest and most economical way to adjudicate particular claims.

See Intercon Research Assocs., Ltd. v. Dresser Indus., Inc., 696 F.2d 53, 56 (7th Cir. 1982) (a

federal court has “wide discretion” in deciding whether to dismiss a party as a defendant in a civil

action); Kuechle v. Bishop, 64 F.R.D. 179, 180 (N.D. Ohio 1974) (in assessing permissive joinder

of parties, “the Court is operating in an area of considerable discretion. The consideration[s]

involved are essentially those of fairness.”). In other words, proper joinder is, to a very great extent,

in the eye of the beholder. Although most exercises of a trial court’s discretion are shielded on

appeal by a deferential standard of review, discretionary decisions masked as jurisdictional ones are

not. See Storm v. Storm, 328 F.3d 941, 943 n.1 (7th Cir. 2003) (“Because the existence of subject

matter jurisdiction goes to the ultimate question of whether the federal courts have the power to

entertain and decide a case, we emphasize that our review in such situations is de novo.”). The

Court fails to see how the adoption of the Tapscott doctrine, which elevates a court’s discretion

concerning joinder into a jurisdictional principle, is likely to promote predictable results at either

the trial court level or on review. In sum, the Court has refused to follow Tapscott in the past, see

Rabe, 2005 WL 2094741, at *2, and the Court will continue to do so until such time as the doctrine

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of fraudulent misjoinder is adopted by the Supreme Court of the United States or the Seventh Circuit

Court of Appeals.

CONCLUSION

For the foregoing reasons, Plaintiffs’ Motion to Remand (Doc. 18) is GRANTED. Pursuant

to 28 U.S.C. § 1447(c), this action is REMANDED to the Circuit Court for the Third Judicial

Circuit, Madison County, Illinois, for lack of federal subject matter jurisdiction. The Motion to Stay

brought by Defendant Merck & Co. (Doc. 4), the Motion to Sever brought by Defendant Merck &

Co. (Doc. 5), the Motion to Dismiss brought by Defendant American Drug Stores, Inc. (Doc. 10),

and the Motion to Dismiss brought by Defendant Walgreen Co. (Doc. 15) are DENIED as moot.

IT IS SO ORDERED.

DATED: 04/20/2006

s/ G. Patrick Murphy G. PATRICK MURPHYChief United States District Judge

in the united states district court for the southern ... · rutherford, edward miechle, rachel...

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